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Honda plans new Bt17-bn factory in Prachin Buri

Japanese auto-maker Honda will invest Bt20 billion to build a new assembly and engine plant in Prachin Buri as well as expanding the Ayutthaya plant that was hit by the devastating floods in late 2011.

Once the new factory is completed and starts operation in 2015, the company's combined production capacity in Thailand will be 420,000 units per year. About 300,000 vehicles will be for the domestic market, with the remainder for export.

The Bt17.15-billion assembly plant will produce 120,000 vehicles per year.

Meanwhile, Bt2.91 billion will be used to expand production at the Ayutthaya plant to 300,000 units annually by early next year.

Hiroshi Kobayashi, president and chief executive officer of Asian Honda Motor and president of Honda Automobile (Thailand), yesterday said that at this time last year, Honda was busy rebuilding its Ayutthaya facilities.

"The great flood of 2011 had closed down the Ayutthaya assembly plant. With the enormous effort of the Honda team and our supporters, it was up and running by the end of March 2012.

"We aggressively moved into the market with the launch of 10 models within only nine months of 2012, including the highly successful Brio Amaze, leading to a new sales record for the year. This has proved that Honda's commitment to Thailand never wavered - and Honda actually emerged from the crisis stronger," he said.

"Honda is committed to growing our business along with the prosperity of Thai society, producing vehicles and parts for the Asean and Oceania markets as well as other markets around the world.

"To ensure that Honda's Thai production capabilities are ready to meet future increases in demand for automobiles based on the rising income levels of people in Thailand, and to meet expected global demand for Honda's small and fuel-efficient vehicles, Honda will invest Bt17.15 billion to build a new assembly and engine plant in Prachin Buri province. We will also invest in increasing the capacity of our existing Ayutthaya assembly plant," he said.

Under its next mid-term business plan, which runs through March 2017, Honda aims to bring in more than 39 million new customers around the world. This will be a combination of 25 million motorcycle customers, 8 million power-product customers, and 6 million automobile customers.

Honda aims to provide good products to customers with speed, affordability and low carbon-dioxide emissions, he said. To enable this ambitious growth, Honda will implement global operational changes that will allow it to offer the best vehicle specifications at competitive costs. This involves three key initiatives.

INITIATIVES

The first is concurrent product development in all six regions of the world, in which new models will launch in all regions within a shorter period of time, enabling Honda to reach higher levels of global production volume very quickly. This will significantly reduce production costs.

The second is the adoption of locally optimised designs, which will also maximise the use of raw materials and local production systems to serve customer needs in each area quickly and efficiently. The third entails improving production efficiency.

"The Bt17.15-billion investment to build the new Prachin Buri assembly and engine plant covers the cost of acquiring some 1,600 rai [256 hectares] of land and constructing a with floor space of around 134 rai ... At the start of production, it will employ about 2,500 associates, including seasonal workers," Kobayashi said. The plant will mainly produce subcompact models to meet the increasing global demand for these vehicles.

Honda recently invested about Bt880 million in the first phase of the expansion of the Ayutthaya assembly plant, which is now complete. The annual production capacity for the plant was increased from 240,000 units to 280,000. Honda will implement the second phase of the expansion plan in April. It will invest Bt2.03 billion to increase the plant's annual production capacity to 300,000 units by early next year.

The company believes that sales volume for the Thai market this year should be equal to or slightly lower than 2012. Honda has set a sales target for Thailand of more than 200,000 units this year, as it has positioned its regional strategic production base here for exports in Asia.

Kobayashi also paid a visit to Prime Minister Yingluck Shina-watra at Government House yesterday. She told him the government would announce a long-term flood-prevention plan at the end of the year to boost the confidence of private investors.


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